PartyGaming undergoes £2 billion merger

After much speculation over the last year it has now been confirmed that PartyGaming are to merge with their Austrian rival Bwin. This will lead to the world’s largest listed online gaming business, and in the meantime has meant that PartyGaming shares have increased by nearly 25%.

The deal is anticipated to be completed in the first quarter of 2011. PartyGaming shareholders will own 51.64% of the new group which will be jointly run by the current chief executives of both businesses, Norbert Teufelberger of Bwin and Jim Ryan of PartyGaming. The new group will be listed in London and the so-called ‘merger of equals’ will create a company with pro forma sales of €682 million last year, and earnings of €196 million before tax, interest, amortisation and depreciation.

Jim Ryan said; ‘With market-leading positions in poker, sports betting, casino and games (in particular bingo), the enlarged group will have a winning formula to exploit the growing online gaming market, supported by a strong balance sheet, significant cashflow generation and a highly experienced management team.’

Norbert Teufelberger, Bwin’s co-chief executive commented; ‘This merger of equals makes great strategic, operational and financial sense: we will be in pole position to capitalise on the wealth of opportunities that will flow from the continued evolution and expansion of the global online gaming industry.’

When the news was released Bwin shares rose 12% to €39.91, and PartyGaming shares rose as much as 30%, the highest on record, to 333p.

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